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Discovery Considers Streaming Options for U.S. Content to Reach Non-MVPD Subscribers

Discovery Inc. is considering a range of options for making its U.S. content more widely available on a streaming platform designed to reach non-cable subscribers.

Discovery CEO David Zaslav told Wall Street analysts on Thursday morning that the company will be making decisions over the next few months about how to best capitalize on the demand for on-demand streaming platforms that fall outside of the traditional MVPD universe. That’s a big step for a company that has been synonymous with the cable industry.

“Is there an opportunity to take that content on a broader basis, to mount an attack on those that are not existing cable subscribers,” Zaslav said during Discovery’s third-quarter earnings call. Discovery has learned from its various efforts in overseas markets, through partnerships with existing distributors and by going it alone with streaming offerings focused on sports and other niches.

Discovery’s goal is to “take our great IP and reach everyone. We want everyone to watch our content,” Zaslav said.

Zaslav opined during the call that MVPDs need to “get some courage” and be more creative in assembling smaller- and low-cost bundles to draw in a wider range of customers, particularly those who are not interested in the regional and national sports channels that drive up the price of cable service. He pointed to Q3 results unveiled Thursday by Dish Network, which drew 214,000 subscribers during the past three months to its low-cost Sling streaming channel bundle, as a sign that consumers want lower-cost options. Sling does not include any sports outlets.

“Stop stuffing the damn bundle,” Zaslav said. “Serve the consumer.”

In its Q3 results, Discovery saw third quarter profit rise as revenue from advertising as well as cable and satellite distribution rose even as the company’s various TV products lost viewers overall.

The New York owner of the Food Network, Discovery Channel, HGTV and TLC cable networks said net income available to the company rose to $262 million, or 35 cents per share, compared with $117 million, or 16 cents per share, in the year-earlier period. Excluding one time items, the company earned 87 cents per share.

Revenue increased 3% to nearly $2.68 billion, compared with $2.59 billion.

In a statement, Zaslav cited “healthy revenue growth in the U.S. and internationally” as a primary factor in the company’s results.

Discovery said its U.S. networks thrived largely on increases in ad pricing as well as higher rates in affiliate contracts, as well as new carriage of the properties on streaming outlets. Still, the company noted that its linear TV ratings fell during the period and that if faced “a decline in overall subscribers.”

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